On the 2nd March 2016, the German Federal Cartel Office (FCO) initiated proceedings against Facebook’s European and German entities, accusing the company of abusing its market power. The case follows a logical progression of regulators seeking to regulate alleged abuses of dominance in new technologies as they impact upon consumers. The first such target was software, then search engines, and now social media websites.
An abuse of dominance is a competition law offence under Article 102 of the TFEU. It is normally associated with conduct such selling below cost to squeeze out competitors, or discriminating between suppliers. Whilst not disclosing much in the way of detail, the FCO allege that Facebook have abused their dominant position by imposing unfair trading terms on consumers, specifically as to the amount of data they capture about them. The FCO has singled out the fact that users are in a poor position to understand the scope and amount of data captured by the company, for advertising purposes and otherwise, and that Facebook is using its dominant position to amass that data.
Although just announced, the case is likely to draw heavy media attention throughout its life. Given the nature of the allegations, Facebook may choose to close the investigation by changing its data collection terms in Europe, or at least informing consumers further of what they are signing up to. Whilst the German FCO (and the EU Commission, with whom they are liaising) are championing the rights of consumers, the EU is once again seemingly throwing up a regulatory opposition to US companies in Europe, something unlikely to be missed by American politicians who now regularly accuse the EU of aggressively pursuing US companies for alleged infringements of laws. However, the hard fact is that there are few major EU technology companies and the internet is presided over by the activities of the Silicon Valley giants, leaving the EU little choice of whom to target in its investigations.